In “Did NAFTA Spur Texas
Exports?” economist Anil Kumar finds that NAFTA
increased statewide exports not only to Mexico and Canada,
but also to emerging markets in Europe, Latin America
and Asia.

NAFTA is responsible for increasing
Texas exports in 2000 by an estimated 23 percent beyond
1993 levels, according to Kumar. The state increased
sales by 17 percent to Latin America, 15 percent to
Europe and 13 percent to Asia.

“The international-trade
expertise that firms gained by selling to Mexico may
have helped them penetrate Europe, Asia and elsewhere,”
Kumar writes.

Kumar also finds that knowledge-
and capital-intensive industries in Texas—such
as electronics, chemicals, transportation equipment
and industrial machinery—have reaped the benefits
of NAFTA. However, labor-intensive industries, such
as lumber and furniture, were hurt by NAFTA.

In “The Economics of Immigration,”
senior economist Pia Orrenius explains the importance
of focusing on the skill level of immigrants rather
than just their legal status when addressing their economic
impact in the United States.

“About 40 percent of our
Ph.D. scientists and engineers were born in another
country,” Orrenius writes. “People tend
to focus on illegal or low-skilled immigration when
discussing immigrants and often do not recognize the
tremendous contribution of high-skilled immigrants.”

She finds low-skilled workers
also contribute to the economy but asserts the benefits
must be weighed against the fiscal burdens, like health
care and educational expenses, to state and local governments.

Legal status doesn’t dictate
whether low-skilled workers will have more of a positive
or negative economic effect, Orrenius explains.

“Being illegal doesn’t
mean these immigrants have a worse fiscal impact,”
she writes. “In fact, a low-skilled illegal immigrant
can create less fiscal burden than a low-skilled legal
immigrant because the undocumented don’t qualify
for most benefits.”

In “Factories Still Matter
in Much of State,” economist Fiona Sigalla and
technical support and data analysis director Franklin
D. Berger find that while much of the state’s
job growth is in the service sector, manufacturing still
remains vital to many communities. In 21 of Texas’
254 counties, it accounts for 20 percent or more of
the jobs.

Overall, however, manufacturing
is a largely urban enterprise. Nearly 90 percent of
the state’s 907,500 factory jobs are located in
or near large cities, according to the authors.

Additionally, manufacturing has
bounced back faster in Texas than in the nation as a
whole. Last year, Texas added roughly 7,500 manufacturing
jobs, a 0.8 percent increase, compared with a U.S. loss
of 72,500 jobs, a 0.5 percent decline, they write.

Economic analyst José Joaquín
López finds in “Dynamic Growth in the Rio
Grande Valley” that the short-term economic outlook
for the area is positive.

Employment gains in health care,
increased agricultural exports due to DR-CAFTA and rising
maquiladora employment should help drive the Valley’s
economy in coming years, according to López.

Despite the positive short-term
outlook, he writes that the region must improve the
educational level of its workforce to increase per capita
income.

Find the March/April issue of
Southwest Economy online at www.dallasfed.org.